Ireland's Trintech sees benefit from hacker attacks

CBS.MarketWatch.com

HANNOVER (CBS.MW) -- The recent spate of hacker attacks on high-profile Web sites has been beneficial to e-commerce security companies. That, at least, is the view of Ireland's Trintech Group PLC.

Trintech's co-founder and executive chairman, Cyril McGuire, told CBS.MarketWatch.com at the CeBIT trade fair that hackers have done his company a favor by raising the awareness of the need for security.

"Hackers are part of the fundamental problem our company addresses. If the Internet was secure, there'd be no need for secure Internet payment services," McGuire said.

"The hackers make companies take heed and make investments in security," he said.

Trintech
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which McGuire founded with his brother John back in 1989, has seen its share price soar from 11 euros at the time of its dual initial public offering on Germany's Neuer Markt and the Nasdaq last September to 109.6 euros Friday. (The chart above shows the performance of its U.S.-listed shares.)

Trintech was initially a commerce security provider, working with encryption technology, before moving into virtual e-commerce security five years ago. Now, McGuire said, the company's business is split roughly 50-50 between the virtual and the "real" worlds. "Wherever commerce takes place, Trintech wants to be there supplying secure payments," McGuire said.

Trintech's mobile, global ambitions

The Irish group, which has some 300 staff worldwide, including roughly 100 in its four U.S. offices, is now pushing into security for mobile commerce. McGuire said that with the development of Wireless Application Protocol (WAP), or Internet-enabled cellular phones, he sees a lot of potential in the mobile commerce arena.

Trintech is also aiming to spread its wings geographically. "There's a void today for a clear leader in global infrastructure security. We're the only pure payment player and want to be the dominant global player of secure commerce payments," McGuire said.

At the moment, Trintech makes some 45 percent of its revenue in Germany and 30 percent in the United States but is moving into Asia, namely in Singapore and Japan. McGuire said he also believes China offers great opportunity. "It's a huge untapped market, (and) no one has a significant presence there."

With a market capitalization now of roughly 2.5 billion euros, acquisitions could be on the agenda. "Merger-and-acquisition activity will be a feature of our future growth strategy. Acquisitions we'd look for would be in regions we're not particularly strong in now, such as the Asia-Pacific," McGuire said.

Another way to grow is through partnerships. Current partners include Visa International; Verisign Inc.
VRSN, -0.55%
whose chairman, Jim Bidzos, is on Trintech's board; Entrust Technologies
entu
; Sun Microsystems
SUNW, +3.92%
; Compaq
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; and Motorola Inc.
MSI, -0.72%
And more alliances are in the pipeline. "We're in talks with Yahoo Inc.
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and others," McGuire said.

Trintech is set to report its fourth quarter and 1999 earnings results next week. McGuire said that although the Irish company is "historically profitable," it's now in "investment mode" and analysts don't expect it to move into the black until the end of next year.

Trintech currently spends 30 percent of its revenue on research and development -- especially targeting mobile e-commerce -- and is also marketing heavily, McGuire said.

For the the third quarter, Trintech's revenue rose 94 percent to $8.03 million from $4.15 million in the same period of 1998. Its net loss narrowed to $2.14 million from $2.85 million in the same period of 1998, while its net loss per share came in at 11 cents vs. 18 cents.

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